📘 Introduction: Why Are Journal Entries Important?
Whether you’re a student of FYBCom, M.Com, BBA, BBM, MBA, or preparing for NET/SET & PGD, Journal Entries are your starting point in accounting. Every business transaction – big or small – must be recorded systematically. This recording starts from journal entries.
In this blog, you’ll learn:
What is a journal entry in accounting?
Why is it important in the real world?
Standard journal entry format
The rules of debit and credit simplified
Simple journal entry examples with full solutions
🧾 What is a Journal Entry in Accounting?
A Journal Entry is a written record of a financial transaction in the books of original entry.
It answers: 🔹 What happened? 🔹 Which account is affected? 🔹 Should it be debited or credited?
It uses the Double Entry System, where each transaction affects two or more accounts – one is debited, and the other is credited.
Example: If you pay rent in cash – rent increases (expense), and cash decreases (asset).
Every transaction affects two accounts – debit and credit
📋 Journal Entry Format (Used in FYBCom, M.Com & MBA)
Here’s the standard journal entry format used in exams and practical accounting:
Date
Particulars
L.F.
Debit (₹)
Credit (₹)
01/07/25
Cash A/c Dr.
10,000
To Capital A/c
10,000
(Being capital introduced into business)
🟢 L.F. (Ledger Folio) is for writing the page number of the ledger where the entry is posted. You can leave it blank in exams.
“Standard Format of Journal Entry in Accounting”
🔑 Golden Rules of Debit and Credit (Simplified)
Before passing journal entries, always apply the golden rules of accounting:
Type of Account
Debit When…
Credit When…
Personal
Receiver
Giver
Real
What comes in
What goes out
Nominal
Expense or Loss
Income or Gain
🔍 Tip for FYBCom students: First identify the type of account involved in the transaction. Then apply the above rule to decide debit or credit.
📍 Caption: “Golden Rules of Accounting Explained Visually”
✅ Step-by-Step Guide to Pass Journal Entries
Let’s break it down in 3 steps:
Step 1: Identify the accounts involved. Is it Cash? Bank? Rent? Sales?
Step 2: Decide the type of account. Personal, Real, or Nominal?
Step 3: Apply the golden rule. Then write it in journal format.
📝 Simple Journal Entry Examples with Solutions
Let’s solve some most commonly asked FYBCom journal problems:
📌 Example 1: Owner Invests Capital
Transaction: Ramesh started business with ₹50,000.
🔎 Analysis:
Cash comes in = Real account → Debit
Capital increases = Personal/Owner’s Equity → Credit
Journal Entry:
cssCopyEditCash A/c Dr. 50,000
To Capital A/c 50,000
(Being capital introduced by Ramesh)
📌 Example 2: Purchase of Goods in Cash
Transaction: Bought goods worth ₹8,000.
🔎 Analysis:
Goods purchased = Expense → Debit
Cash goes out = Real → Credit
Journal Entry:
cssCopyEditPurchases A/c Dr. 8,000
To Cash A/c 8,000
(Being goods bought for cash)
📌 Example 3: Sold Goods on Credit to Raju
Transaction: Sold goods worth ₹5,000 on credit to Raju.
🔎 Analysis:
Debtor increases (Raju) = Personal → Debit
Sales = Income → Credit
Journal Entry:
cssCopyEditRaju A/c Dr. 5,000
To Sales A/c 5,000
(Being goods sold to Raju on credit)
📌 Example 4: Rent Paid in Cash
Transaction: Paid rent ₹2,500.
🔎 Analysis:
Rent = Expense → Debit
Cash = Real → Credit
Journal Entry:
cssCopyEditRent A/c Dr. 2,500
To Cash A/c 2,500
(Being rent paid in cash)
📌 Example 5: Commission Received
Transaction: Received commission ₹1,000.
🔎 Analysis:
Cash = Real → Debit
Commission = Income → Credit
Journal Entry:
cssCopyEditCash A/c Dr. 1,000
To Commission A/c 1,000
(Being commission received)
Solved examples of journal entries for practice
🔄 Common Mistakes Students Must Avoid
🚫 Don’t mix up Sales with Cash 🚫 Narration must be included 🚫 Totals of Debit ≠ Credit = WRONG! 🚫 Don’t confuse between personal and real accounts
✅ Pro Tip: Always total the debit and credit columns. They MUST match!
🧠 Quick Practice (Do It Yourself!)
Paid electricity bill ₹800
Sold old furniture for ₹2,000
Borrowed ₹10,000 from bank
✏️ Try solving using format and rules above. We’ll post solutions in the next blog!
📌 Real-Life Use of Journal Entries
✔️ Businesses use journal entries to prepare ledgers, trial balances, and finally the financial statements like Balance Sheet and Profit & Loss Account. ✔️ Every accounting software – Tally, SAP, QuickBooks – is based on journal entries.
📚 Conclusion
Journal Entries are the foundation of accounting. Learning to pass correct entries builds your confidence and helps you crack exams like FYBCom, MCom, MBA, and NET/SET Commerce easily.
🟢 Keep practicing journal problems with solutions. Start with simple journal entry examples and move to complex ones like depreciation, bills, or adjustments.
